TaxTMI 
TaxTMI 
1979 (7) TMI 128
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....aring the parties, and considering the evidence on record, the learned ITO held that the cash credits of Rs. 22,000 are not genuine. 3. The learned AAC in appeal accepted all the cash credits, excepting the one in the name of Shri Kundanlal. 4. The assessee has been carrying on contract business in R.A.P.P., Ratbhatta. The assessee received total payments of Rs. 6,84,700. The learned ITO, after rejecting the book results, applied net profit rate of 15 per cent on the disclosed receipts. 5. The learned AAC agreed that the net profit rate of 15 per cent applied by the ITO was quite correct. 6. The assessee is alleged to have borrowed some funds for carrying out the contract work. On such loans, interest of Rs. 10,914 was paid. The assessee claimed this payment of interest. The authorities below disallowed the claim because in the case of the assessee, net profit rate was allowed. 7. Before the Tribunal, the first contention of the assessee's counsel was that the building material amounting to Rs. 1,95,982 was supplied by the Department at fixed rates in view of cl. 33 of the contract agreement. On such supplies, there could be no profit to the assessee. Even the contro....
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....partment, and the assessee had accepted the same. In the year of account, the assessee disclosed loss. The business was also closed in June, 1971. The receipts disclosed by the assessee are higher. In this year, the cost of the building material supplied by the Department was Rs. 1,59,070. On this item, there could be no profit to the contractor. Looking to the special facts of this year, in my opinion, net profit rate of 15 per cent shall be applied on the net receipts as discussed above. The learned ITO shall calculate the net profit accordingly. 13. The other contention of the learned counsel for the assessee was that the assessee had to borrow loans from third parties for carrying out the contract. Such loans were held to be genuine. The assessee had to make payment of interest of Rs. 10,940. So, this payment of interest should be allowed. 14. The learned Departmental Representative contended that in the present case, net profit has been applied, and as such, the payment of interest may, not be allowed separately. 15. In our opinion, the contention of the assessee could hardly be accepted. The loans in question were borrowed for the purpose of carrying on the business.....
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.... 3,382 on 28th Dec., 1971 by cheque No. 368416. Shri Kundanlal did receive the payment on 1st Jan., 1972. The said payment was accepted by Shri Kundanlal. If the entire statement of Shri Kundanlal is appreciated, it would be clear that he is well-to-do person. He did advance the money to the assessee. Shri Kundanlal was not having account books. He was generally having huge cash at his residence. Out of such cash, the deposit of Rs. 10,000 was made by him. Shri Kundanlal on account of ulterior motive stated that he did not advance the sum of Rs. 10,000. According to the learned counsel, if the entire facts and circumstances are taken into consideration in their entirety, it would be clear that the cash credit of Rs. 10,000 was genuine. The learned counsel also relied on the written note submitted before the Tribunal. 18. According to the ld. Departmental Representative, it was for the assessee to show that the cash credit of Rs. 10,000 in the name of Shri Kundanlal is genuine. Shri Kundanlal himself stated that he did not advance the loan. There is no other evidence on record to establish the genuineness of the loan. Under the circumstances, the ld. AAC was quite correct in hold....
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....ch of imagination, could become due. So, it is established that the said payment of Rs. 1,200 was never made towards the deposit of Rs. 5,000. Once this is established, then the only and probable conclusion which could be drawn is that the said payment of Rs. 1,200 towards interest was paid on the deposit of Rs. 10,000 in question. There are other circumstances also which go to support this conclusion. The learned AAC in his order, stated as under:- "He further admitted that after adjusting certain payments against the outstanding balance in the account of Nebhandas and Sons on 11th Dec., 1970 further balance was Rs. 5,000 for which a cheque of Rs. 5,000 received on 10th June, 1971 but the same was not encashed and this amount is still outstanding along with interest for 15 months at Rs. 1,125 and this amount of interest was duly offered by him in his assessment for asst. yr. 1972-73 for which hearing was fixed on 31st Dec., 1971. Thus, on the basis of these facts, there can be no manner of doubt about the so-called credit of Rs. 10,000 appearing in the books of appellant this year in the name of Shri Kundanlal and accordingly, it is held that this credit has remained unexplaine....